Palestinian Authority 'may have lost billions'

The Palestinian attorney general said he had uncovered the theft or misuse of $700m (£400m) of public funds, and suspects much more has gone missing, in an inquiry into widespread official corruption. Ahmed al-Meghami said billions of dollars may have been misappropriated in total and that his office has ordered 25 arrests to date and issued 10 international warrants relating to fraud within the Palestinian Authority (PA).

The announcement comes less than a fortnight after Hamas's sweeping victory in parliamentary elections that is mostly attributed to widespread unhappiness at graft among some Palestinian leaders.

Mr Meghami said that in December that the Palestinian president, Mahmoud Abbas, who is not tainted by corruption accusations, asked him to delay a public announcement about the investigation until after the election because he feared it would be seen as a ploy to win votes.

"There are 50 cases of financial and administrative corruption. The amount of money that was squandered and stolen is more than $700m," said Mr Meghami.

But he said he believed much more had been misappropriated. "I cannot count the numbers because I'm not an accountant. It might be billions of dollars. When I end my investigation, I'm going to put out in detail all the numbers," he said.

Mr Meghami did not name the individuals targeted in the investigations, although ordinary Palestinians blame many Fatah political leaders from the late Yasser Arafat downwards.

He said the inquiry included the state-owned oil, tobacco and broadcasting corporations. The cases also include payments of $4m of PA funds and $2m of Italian aid money to a fictitious pipe factory. "The factory existed only on paper and the investigation is under way to find out where the money went," the attorney general said.

Corruption and economic mismanagement have contributed to an economic crisis in the occupied territories which has left the PA unable to pay its workers this month after foreign donors withheld aid in protest at over-expenditure.

But the Israeli cabinet yesterday approved the belated transfer of $45m in tax revenues to the PA frozen after Hamas's election victory. Officials said further payments will be reviewed once Hamas takes control of the Palestinian government.

Also yesterday, a Palestinian man stabbed a woman to death and wounded five other people in a knife attack aboard a rush-hour minibus in Israel. The police said the attack was politically motivated. The attacker, described as a 22-year-old student living in Arab East Jerusalem, killed a 60 year-old woman when he stabbed her in the stomach in Petah Tikva.

The driver stopped his minibus and opened the doors, shouting "terrorist, terrorist". An angry crowd overpowered the man before he was arrested.

"I was driving to Tel Aviv and was stopped at a red light. And then I saw a kid who looked like an Arab take out a knife and stab people," Moshe Gershoni told Army radio.

Israel killed three men it identified as "terrorists" in an air and artillery assault on the Gaza Strip yesterday in response to a Palestinian rocket attack that severely injured a seven month-old baby and two other people on a kibbutz on Friday.